What are mortgage refinancing scams like?

Answer:

Mortgage refinancing scams take advantage of people who do not have a good idea of what homeownership is. Such people will be easily fooled into higher rate costly refinancing that strips them of equity only to get some more cash and lower monthly payments.

You need to have a feeling of what long-term ownership possibly means in order not to be lured by cheap tricks as in mortgage refinancing scams. Consider the following example:

You have a house worth $200,000. Your remaining mortgage balance is $100,000. You have 12 years left on the loan, and your monthly payments are affordable. Someone comes in and offers you to make a cash-out refinance and pocket some quick $40,000. How does that happen? With this type of mortgage refinancing you are going to get a new loan of $150,000 which pays the existing one, has $10,000 in closing costs and leaves you with $40,000 cash. You are left with $50,000 equity on the house, the repayment period is extended, but rates are higher. Monthly payments drop only with $50.

Is it worth falling for the quick cash in mortgage refinancing scams? For someone who wants to make a homeownership dream come true, no.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.